4 keys to AirBoss' strategic initiative

NEWMARKET, Ontario—It's well-known that AirBoss of America has spent a lot of time this year embarking on a strategic initiative to reshape the Newmarket-based firm's business and operations.

The most visible change has been to restructure the company into two reporting segments: AirBoss Rubber Solutions (ARS) and AirBoss Manufactured Products (AMP).

AirBoss leaders have said the ARS rubber compounding business will be the main focus for growth going forward, and have ensured that the rubber and tire industry is aware of the extent of the operations of North America's second largest mixer.

But there also is much to decide on with the AMP unit, which is made up of the former AirBoss Defense Group and AirBoss Engineered Products businesses.

The company has no timetable to complete this strategic initiative, and there is a lot of work going on behind the scenes.

Chris Bitsakakis, AirBoss president and co-CEO, spoke with Rubber News about the ongoing restructuring. Here are four keys to the initiative.

Years back, AirBoss bought an operation in Acton Vale, Quebec, that became part of its AirBoss Defense Group.

At the time, the business made a lot of commercial rubber footwear, but AirBoss took it into military and defense markets. On the commercial side, footwear firms have a wide range of sizes, styles and colors. And as a manufacturing company, that wasn't really AirBoss' specialty.

So the company pivoted to extreme cold weather boots, which it supplies to the U.S. and Canadian militaries. AirBoss also produces chem-bio protective overboots and rubber gloves for all of NATO.

In addition, it supplies gas masks for the Canadian and Australian defense forces, and Bitsakakis said plans are to expand that business and bid on the U.S. contract the next time it comes up.

The funny thing, he said, is that anytime the word "tactical" is attached to something, it somehow draws the interest of the general public.

"You have a flashlight and you call it tactical flashlight, then all of a sudden everybody wants one," Bitsakakis said. "So we're getting a lot of requests for our extreme, cold weather military boots because they're the best out there.

"People who are snowmobilers and are spending a lot of time outdoors working would like an opportunity to be able to engage with us commercially."

Because of that interest, AirBoss is considering making one boot based on its military technology that would be available to the general public, but at a price point that would be affordable.

"That's something that our team in Acton Vale is working on as a bit of a side project right now," he said.

To this point, they've produced prototypes to pitch to Bitsakakis.

"Even though generally speaking I don't want the company to be a footwear company, I can see their point," the AirBoss president said. "They have a lot of good assets there that can do this, and as long as we keep the SKUs very limited—one color and a few different sizes—it has potential."

With Trelleborg A.B. CEO Peter Nilsson in the role of matchmaker, AirBoss in February hired Mikael Fryklund as executive vice president and chief strategy officer. He has experience in two of AirBoss' key markets, having served as an executive with Trelleborg's noise, vibration and harshness division, before later becoming CEO of top custom mixer Hexpol A.B., also out of Sweden.

"Having somebody who understands both rubber molding and rubber compounding, and having him on staff, has been very interesting," Bitsakakis said. "He's been a good addition."

Fryklund has relocated to AirBoss operations in Kitchener, Ontario, and has an office two doors down from Bitsakakis, so the two speak all the time. And Bitsakakis said Fryklund's background puts him in a position to help all areas of AirBoss.

His knowledge of the European market eventually will aid the Canadian firm in expanding its rubber compounding business into Europe, but not until after it shores up its coverage in the U.S. and Mexico. Those plans in North America include expanding the breadth of its product lines, something that will be announced this year, according to Bitsakakis.

"So once those two things are in the works, then we would certainly consider our European expansion, most likely through acquisition," he said.

When talk turns to prime real estate available for development and a building ripe for an upscale conversion, an old rubber factory usually isn't the first thing that comes to mind.

But Bitsakakis said that was one of the things AirBoss will be working closely on with TD Securities Inc., a financial firm brought in to help the rubber company with its strategic decision.

TD Securities, he said, has a real estate arm that will be key in helping AirBoss best monetize its flagship rubber mixing plant, which is located right near downtown Kitchener. The most likely direction will be to find a developer to transform the historic, 120-year-old factory into condominiums.

"That building is beautiful," Bitsakakis said. "I won't say art deco, but almost an art deco type of building. The bones are very strong. That building would survive a carpet bombing.

"It's built the old way with massive posts, and that's a really solid building. There has been another major rubber plant that was redeveloped into condominiums some years ago, just down the street, and it's quite a beautiful complex."

Besides the existing building, he said there also is plenty of land to build new towers on the site. "We worked with an architect and we've done some renderings on what's possible there, but it will depend on the developer that comes in and takes a look at it."

In the meantime, AirBoss will be looking to keep its main rubber mixing facility in the Kitchener area. It has worked with city officials on getting favorable zoning for the renovation of the current plant, and plans to build a state-of-the-art compounding factory nearby, enabling AirBoss to retain its veteran work force.

"It would probably take us three years to build a new building and put new equipment into it, but our intention would be to build the most advanced rubber compounding facility in the world," Bitsakakis said.

AirBoss has made significant investments in automation and artificial intelligence over the past couple of years, spending to bring the updated technology both into its manufactured products and the AirBoss Rubber Solutions units.

"We've been working on the AI system to control a lot of our machines in the business," the AirBoss co-CEO said, "with really interesting and timely data generation, giving us the opportunity to generate decisions and changes based on the data coming in.

"The automation and artificial intelligence side of the business is expanding faster than it ever has, and I think it's going to be a big part of our strategy to grow our business going forward in the most efficient way possible."

On the automation side, AirBoss is focusing on equipment that can minimize variability in weighing, and in chemical introduction during the mixing cycle of a batch of rubber.

With AI, one thing the firm is doing is trying to integrate the know-how with its extensive collection of thousands of proprietary formulations. "We have a very advanced R&D lab," Bitsakakis said. "We really have invested in people processes to develop new and interesting rubber compound formulations, and we have this massive database of everything that every formulation we have does."

Artificial intelligence, he added, then could be used to take the specific properties a customer requires for a compound and go through AirBoss' entire database to figure out which formulations may solve the problem. The firm's staff of chemists would then fine-tune it into the final compound.

"Those are the kinds of things that are to me very exciting as our chemists work speeding up how quickly we develop things and creating consistency in our new formulations," Bitsakakis said.